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If real GDP rises but real GDP per capita falls, which conclusion is most appropriate?

Answer and explanation

Correct answer: Population growth exceeds real GDP growth

Real GDP per capita equals real GDP divided by population. If total real GDP increases but the per-person figure decreases, population must have increased faster than real output over the relevant period. This conclusion does not require any assumption about the price level because real GDP already removes price effects. The result also says nothing definite about equality or total welfare, so A is the only valid answer.

Related tags

Gdp And WelfareReal GdpPer Capita IncomePopulation GrowthNational Income And Related AggregatesEconomicsClass 11 Mcq

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